Precautions before using blockchain in loyalty programs
Precautions before using blockchain in loyalty programs
Platforms that integrate multiple loyalty programs have many risks. These platforms add a layer of transaction between customers and loyalty program operators as well as vendors, which is likely to cost less per transaction, but this can increase over time, much like the cost of OTA loyalty programs. Unfortunately, on these platforms, customer data (the most valuable asset of a loyalty program) can be made available to other network participants or even competitors. Exchange rate depreciation is another risk facing a free market for points-based trading.
The use of blockchain technology in the development of platforms can help travel companies reduce these risks. Participation in the initial structure of agreements and business partnerships is essential to protect the critical components of loyalty programs. These components include: currency value, customer data and relationships, and transaction costs.
For any travel company considering investing in blockchain, there are a few important rules: First, these companies will definitely want to participate in the process of defining how to exchange currency between programs (exchange rates, transfer rules). Second, they seek exclusive control over their data to ensure that only loyalty points enter into the flow of transactions, and third, they want to ensure that this platform is non-discriminatory and remains so. Alternatively, traditional travel-mediated tools such as a paid city location program and proprietary advertising can force companies to adopt a long-term in-game payment strategy (spend to stay competitive).
Travel companies such as airlines and hotel chains have long recognized the power of OTAs in disrupting the tourism industry and are currently paying the same price. The emerging status of blockchain for use in loyalty programs provides a good opportunity to understand the value of a distributive network and shape its future impact, provided that travel companies do not waste more time.
Efficiency of blockchain in loyalty programs
In a hybrid loyalty program (including several loyalty programs in one program), the loyalty currency gained through blockchain technology with one brand can also be spent on purchases from other participating brands. This can be unfair because some brands have the potential to sell more while others have no customers. Successful unified loyalty programs take the utmost care in selecting the brands participating in the program so that these brands are balanced and balanced. Brands should provide the best value and profit to customers without focusing only on their own interests, for example, two supermarkets should not be included in a loyalty program because it creates negative competition.
